Product profile: paraxylene

24 March 2003 00:00[Source: ICB]

World balances are tightening and with few plants due onstream
in the next few years, further investment is needed to support
growth in PTA and polyester

Uses

Paraxylene (PX) is the largest volume isomer of the mixed
xylenes. The primary consumer with about 98% of demand is polyester
via its intermediates, purified terephthalic acid (PTA) or dimethyl
terephthalate (DMT). A small amount of PX is used as a solvent and
to produce di-paraxylene and herbicides.

Supply/demand

A string of production problems across the globe, as well as new
PTA startups in Asia have tightened supply and forced prices up.
Supply in Asia is very tight as over 2m tonne/year of PTA capacity
went onstream in 2002 with 1.55m tonne/year due in quarter two in
China, Taiwan and South Korea.

A series of maintenance turnarounds and operating problems kept
product short in Europe in early 2003. The market is now said to be
balanced to tight with only Polimeri's Priolo unit still down and
not likely to restart until the end of April at the earliest.
Demand is said to be reasonably good in Europe, but is being mainly
driven by demand for export volumes to Asia and the US Gulf.
European consumption is set to rise with the startup of
Interquisa's 350 000 tonne/year PTA unit in Spain this quarter as
well as DuPontSA's 250 000 tonne/year DMT unit in Turkey, which is
being readied to restart in July.

West European output was 1.85m tonne in 2002, estimates PCI
Xylenes &Polyesters. PCI rates demand in western Europe at
nearly 2m tonne last year, up about 5% up on 2001, with about half
of the growth in consumption fed by increased imports from outside
the region, principally from North America.

Pricing

The European market has seen most buyers and sellers switch to
monthly contracts, bringing the sector in line with the US and
Asia. However, a minority of consumers in the polyester fibre
sector are less keen to shift, arguing it would make them more
vulnerable to market volatility. A two-tier system has emerged with
monthly contracts running alongside the traditional quarterly
contract.

Prices have surged this year. European first quarter contracts
jumped by E90/tonne to E580/tonne FD NWE and the March monthly
contract settled at E740/tonne FD NWE. One supplier has nominated
E800/tonne for the second quarter contract. Spot markets remain
volatile. Levels soared past $900/tonne in early February but have
since dropped back to $800-830/tonne fob.

Asian numbers are high with offers in early March at
$860-880/tonne fob Korea. The nomination for April contracts is at
$850-870/tonne. US spot offers are at $860-870/tonne fob US Gulf
with the March contract settled (except for one player) at 36.75
cent/lb, up 6.75 cent/lb on February.

Technology

Conventional technology is based on the isomerisation of mixed
xylenes from refinery reformate streams or from pyrolysis gasoline.
High purity product can be obtained using crystallisation or
selective adsorptive separation, such as UOP's Parex and IFP's
Eluxyl processes. Toluene disproportionation (TDP) is another route
with the latest catalysts able to produce a PX-rich stream, but
with co-product benzene.

Processes have also been developed using a zeolite catalyst for
the alkylation of toluene with methanol to produce PX with
co-producing benzene. UOP/BP's Cyclar technology which converts
propane and butane to PX and benzene was commercialised in Saudi
Arabia in 1999.

Health and safety

PX is a clear flammable liquid. Flashback can occur as the
vapours are heavier than air. It can irritate the eyes, mucous
membranes and skin. Overexposure can lead to central nervous system
depression, headache, dizziness, nausea and unconsciousness.

Outlook

PCI forecasts growth in western Europe at 9%/year during
2002-05, and at 7.3%/year for 2002-08. Global demand growth is
rated by PCI at 8.2%/year for 2002-05 and at 7.1%/year to 2008.

PCI says that global balances are beginning to tighten and this
will continue over the next three years with availability becoming
critical post-2006 in the absence of any new investment. Players
believe it is more likely idled units will restart before any more
new capacity is built. Plants are dormant at Chevron Phillips in
Puerto Rico, Coastal in Canada and ExxonMobil in Singapore.
Additional feedstock from the European Auto Oil 2 directive in 2005
could also spur new investment. Nearly 1.2m tonne/year new PX
capacity will come onstream in Iran by 2005, and Kuwait's PIC plans
a 670 000 tonne/year unit by 2006.

European paraxylene capacity, '000 tonne/year

Company

Location

Capacity

Atofina

Gonfreville, France

135

BP

Geel, Belgium

420

Cepsa

Algeciras, Spain

100

ExxonMobil

Botlek, Netherlands

500

Huntsman Petrochemicals

Wilton, UK

345

INA

Sisak, Croatia

73

Kirishinefteorgsintez

Kirishi, Russia

80

Lukoil Neftochim

Burgas, Bulgaria

15

Omsk Refinery

Omsk, Russia

205

PCK

Schwedt, Germany

60

Petkim

Aliaga, Turkey

120

Petrobrazi

Brazi, Romania

20

Petrogal

Oporto, Portugal

125

Petromidia

Midia, Romania

20

PKN

Plock, Poland

48

Polimeri Europa

Priolo, Italy

190

Sarroch, Italy

100

Rompetrol

Navodari, Romania

20

Ruhr Oel

Gelsenkirchen,

Germany

130

Shell & DEA Oil

Wesseling, Germany

130

Slovnaft

Bratislava, Slovakia

50

Ufaneftekhim

Ufa, Russia

180

Source: ECN/CNI

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